Cazoo, an online car retailer,has failed to secure funding
The digital used-car business founded by the former Zoopla boss Alex Chesterman has filed an notice at the High Court that it plans to appoint administrator.
The British car dealer has suffered a spectacular fall in fortunes. In 2021, the company was valued at more than $8bn (£6.4bn), after it floated on the New York Stock Exchange.
Cazoo’s share prices plunged later and the company was forced to undergo a series restructurings and refinancings as a means of survival, including a $630m swap from debt to equity completed in December.
Cazoo acknowledged last week that they needed more cash but said that no one was willing to offer outside capital. They also stated that the company burns around £30m per quarter. The bosses said that they were looking at alternative solutions including selling part of the company.
Cazoo’s operating businesses, however, warned that without a deal they would “need a liquidation or administration” and possibly wind up the business.
Alex Chesterman, the founder of Cazoo, became one the richest men in Britain just three years after the company was founded. The publisher of the Daily Mail was another big winner.
The company spent tens and tens millions of pounds per year on advertising, sponsorships, and sport sponsorships to raise its profile.
It has signed deals with nine clubs including Premier League giants Everton, Aston Villa and Real Sociedad in Spain, French giants Olympique de Marseille and German’s SC Freiburg.
Cazoo is also a major sponsor of the St Leger Stakes horserace, the Hundred Cricket tournament, Rugby League World Cup and the PDC World Darts Championship.
The business once employed over 5,000 people in Britain and Europe. However, it has cut thousands of positions to stay afloat.
Cazoo, according to its most recent annual report filed in America, had only 1,500 employees as of March 2023. The vast majority were in Britain.
The possible administration is amidst a fall in the value used cars and fears that the demand for electric vehicles may have stalled.
Cazoo owned its entire stock of used cars, which they offered to deliver directly to the customers’ door from hubs across the UK.
The company embarked on an aggressive period of expansion both domestically and internationally, acquiring rivals and expanding throughout Europe.
In March, it announced that it would change its business model. It will sell off its inventory of vehicles, and become a pure online marketplace similar to Autotrader.
Cazoo announced at the time that it would “change our operations to align with a pure play marketplace model”, such as ceasing all fulfilment operations and cutting down on headcount.
Cazoo informed the stock exchange on Wednesday that three of its UK subsidiary had filed notices to appoint an administrator. These filings give creditors 10 days to stop suing the company. This can be used as a last-ditch effort to save the business.
In February, it was reported that Cazoo was bringing in a restructuring team to help navigate the company’s funding crisis. The business was also exploring a possible sale or breakup.
Cazoo would join a list of UK firms that have gone public in the US through a special purpose acquisition company, or spac, at a valuation so high it is unimaginable before going into administration.
Both Arrival, a maker of electric vans, and Babylon a health company went public on the US stock exchange using spacs and filed for bankruptcy.
A legal filing revealed that Cazoo was being advised by Magic Circle, a law firm.